Abstract
This study uses an autoregressive distributed lag (ARDL) model to investigate the role of incomes, relative price competitiveness, and substitution prices in tourism demand from Indonesia’s six largest countries of origin from 2007Q1 to 2019Q4. Income level, competitive prices, and substitution prices significantly impact the demand for tourism in Indonesia. Malaysia, Singapore, Australia, Japan, and India are income elastic, signaling that tourism is a luxury good, but China (normal good). Malaysia and China are price elastic while Japan, India, Singapore, and Australia are less affected by changes in relative prices. Substitute prices may drive tourist to other destinations if the change in prices is large.
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